Amends the Uniform Commercial Code to provide for emerging technologies

• Democratic3

◆ The sponsor's argument

Why the sponsor says this is needed

New York commercial and financial law has unique respect for freedom of contract and strong protections for the negotiability of commercial instruments. This has long made New York the preferred U.S. jurisdiction for paper-based commercial and financial transactions; this is not yet the case for transactions involving digital assets. If New York were to enact the bill, New York would retain its commercial primacy, which otherwise might be lost to states that have modernized their commercial law to take emerging technologies into account. Enactment of the bill will eliminate disincentives to the choice of New York law and jurisdic- tion to govern transactions in, and to resolve disputes concerning, digital assets. More than that, enactment of the bill would make choice of New York law and jurisdiction affirmatively attractive for purchasers of digital assets. This will further New York's long-standing goals of (i) encouraging choice of New York law and jurisdiction to govern commercial contracts and (ii) making the advantages of electronic commerce available to the greatest extent in New York. This bill is a modified version of the model Emerging Technologies Amendments to the Uniform Commercial Code (UCC) as proposed by the Uniform Law Commission and the American Law Institute, tailored to mesh with important New York policies reflected in New York's version of the UCC. The bill preserves and applies existing New York-specific princi- ples, particularly those protecting the rights of good faith purchasers of negotiable instruments and documents, to transactions involving digital assets which are the electronic equivalent of such instruments and documents. By updating New York's UCC to cover all digital assets that meet the criteria for digital assets covered by the new Article 12 in the bill, prompt enactment of the bill would encourage parties to choose New York law and courts to govern commerce in digital assets, particularly those which function as electronic notes, drafts, bills of exchange, or other electronic media. Encouragement of New York-based digital commerce would be expected to increase business revenues, professional service fees and incomes in New York, and, as a result, New York tax revenues, and possibly future tax revenues on digital trans- actions.

This is the sponsor's own case for the bill, quoted from their memorandum. It is not Agora's description of what the bill does.